Wall Street Braces for More Layoffs as Deal Drought Deepens

Wall Street banks are preparing for another wave of job cuts as economic turbulence, trade uncertainty, and stalled dealmaking shake investor confidence. Analysts warn that if conditions don’t stabilize by summer, major firms may be forced to slash more staff amid declining revenues and a slowing IPO market.

Wall Street is no stranger to market turbulence, but the current slowdown in dealmaking is triggering a deeper kind of concern—one that’s creeping into boardrooms and back offices alike. With global investment banking fees dropping and economic uncertainty clouding forecasts, major U.S. investment banks are preparing for what could be another round of job cuts in the months ahead. The early-year optimism that bonuses and boardroom payouts signaled a stable rebound is fading fast.

The numbers offer a sobering view. Global investment banking fees totaled $16.83 billion from January 1 to March 13, a 6.3% dip from $17.96 billion during the same period last year, according to preliminary data from Dealogic. The decline becomes more alarming when compared to the fourth quarter of 2024, when dealmaking activity had pushed fees to $19.96 billion. Equity offerings have also slowed down to $57 billion as of March 19 from about $69 billion during the same time in 2024. These figures matter, not just for bottom lines, but for the thousands of banking professionals whose livelihoods depend on robust capital market activity.

While cyclical staff reductions are common on Wall Street, this year’s layoffs are becoming less routine. JPMorgan and Bank of America have already started their annual performance-based cuts. But Goldman Sachs and Morgan Stanley are planning broader staff reductions in the coming weeks, reflecting a growing sense that this downturn could last longer than initially expected. Analysts and recruiters agree: if deal pipelines don’t rebound by summer, layoffs could ripple across both major banks and boutique firms.

“There’s an expectation that investment banking pickup is delayed, not dead,” said Mike Mayo, banking analyst at Wells Fargo. “But if we’re having this discussion in the middle of the summer, that could be a different story. If the revenues aren’t coming in, then employees bear the brunt.”

That grim forecast is shared by Chris Connors, principal at Johnson Associates, a firm that tracks Wall Street compensation trends. Connors noted that larger banks tend to move first on headcount reductions, with boutique firms often following if conditions don’t improve. “If the pipeline does not materialize quickly, then they’ll make moves to reduce staffing levels,” he said.

Underlying the slowdown is a broader climate of uncertainty. Political rhetoric—including renewed threats of tariffs from former President Donald Trump—has shaken investor confidence. Executives are hesitant to greenlight IPOs, unsure whether their company’s stock will perform well in the post-offering period. And even though last year’s bonus cycle ended on a high note—with Bank of America boosting its investment banking bonus pool by an average of 10% and Goldman Sachs CEO David Solomon receiving a 26% pay raise to $39 million—the outlook for 2025 is significantly murkier.

Wall Street’s nervous energy is also playing out in stock valuations. Shares of boutique investment banks are being hit hardest: Evercore is down roughly 22% year-to-date, while Jefferies has lost 21%. Larger banks have fared better. JPMorgan’s stock is up 3.5%, and Goldman Sachs has managed a modest 1.3% increase, thanks largely to diversified revenue from trading, consumer banking, and wealth management divisions. But the disparity underscores a brutal truth—smaller, deal-reliant firms are more exposed when the deal flow dries up.

As the second quarter begins, bankers are watching the calendar almost as closely as the markets. Summer looms as a critical inflection point. If mergers, IPOs, and capital raises don’t return soon, the layoffs could widen. For now, Wall Street is holding its breath, hoping that this downturn is a delay, not a derailment.